Insurance planning answers three questions: which types of insurance you need, how much life and health cover your family needs, and whether you can pay for both every year. Good insurance planning sizes life cover from your family’s needs, not a fixed multiple of income, and sizes health cover from hospital costs in your city, with a super top-up above a base policy. It buys protection before any savings policy. The 1% Club app’s AI CFO shows your monthly cash flow, and its Insurance section offers a free policy review.
Want to know whether your insurance planning fits your monthly cash flow?
AI CFO, the financial assistant in the 1% Club app, explains insurance terms in simple language and, once you link or add your accounts, shows your cash flow, your monthly surplus and how many months your tracked net worth could support your spending. The app’s Insurance section adds a free, call-based advisory service from 1% Club for health cover, term life cover and reviews of the policies you already hold. Try asking: “Explain term insurance and health insurance in simple words with Indian examples.”
Updated with the latest reliable information available as of 13 October 2026. Where a rule in this insurance planning guide comes from an older circular of the Insurance Regulatory and Development Authority of India (IRDAI) or from a tax provision, its date is stated.
Insurance planning explained: why it comes before you buy a policy
Insurance planning is the process of working out how much protection your household needs against two money risks, then choosing cover that fits your budget. The first risk is losing your income because you die early. The second is a medical bill large enough to take your savings. Good insurance planning starts with those two losses and who would bear them, and only then moves on to the types of insurance that cover them. It is one part of your wider financial plan, and it works best when it comes first. Buying first and planning later is how families end up with a pile of policies and still no protection where it matters.
Illustration: A family has ₹5 lakh of health cover and faces a ₹12 lakh hospital bill. At best the insurer pays ₹5 lakh and the family finds the other ₹7 lakh. Separately, if the only earner died with a ₹45 lakh home loan and no term cover, the family would carry the loan and lose the income at the same time. Insurance planning exists to close gaps like these before they open.
Households still carry a large share of health costs themselves. The health ministry’s National Health Accounts estimates for 2021-22 put out-of-pocket spending at 39.4% of total health expenditure, down from 62.6% in 2014-15. That is real progress, yet it still means households paid about ₹39 of every ₹100 spent on health from their own money, which is why health insurance planning matters.
“Insurance is protection, not an investment. Term cover and health cover pay out only if something goes wrong, and they carry no savings element. Treat insurance planning as a money question first (how big could the loss be, and who pays?) and a product question second.”
Where to start with insurance planning, by life stage
No single guide suits every household, so use this table to find your starting point in insurance planning and the types of insurance to start with. It also shows how family insurance differs from personal insurance, because family planning involves more people and more risks.
| If you are | Start with |
|---|---|
| In your first job | A personal health policy on top of any employer cover, and a small emergency fund |
| Newly married or a new parent | Health cover for everyone, and term cover sized to your family’s needs |
| Carrying a home loan | Term cover that at least clears the loan and covers living costs |
| Supporting parents | A separate health policy for them, as our guide to health insurance for parents above 60 explains |
| Self-employed or paid irregularly | Both covers, sized on a lean year, and a bigger emergency fund |
| Relying on employer cover | Personal health cover and personal term cover that move with you |
Wherever you start, the sequence of insurance planning is the same: size the loss, size the cover, check the budget, then buy.
Types of insurance in India: what each one protects
In simple words, insurance is a contract: you pay a premium, and the insurer pays for a loss the policy names, such as a death or a hospital bill. Insurance falls into two broad classes, and each class holds several types of insurance policies. Life insurance pays out on death, or on survival to a set date, depending on the policy. General insurance covers most other risks, such as health, motor, home and travel. Insurers in India are licensed as life, general or standalone health insurers, so the types of insurance you hold may come from more than one company. Whatever the type of insurance, the policy wording sets what is covered. Insurance planning starts with the two that matter most: term life cover and health cover.
Life insurance and health insurance protect against different events. Life cover pays your family if you die. Health cover pays for treatment while you are alive. One cannot replace the other, which is why insurance planning treats them as two separate sums. The rest of this guide focuses on life insurance planning and health insurance planning, because those two carry the largest risks.
Types of life insurance
Life insurance planning starts by separating protection from savings.
| Type | What it does | Where it fits in insurance planning |
|---|---|---|
| Term insurance | A term insurance plan pays a fixed sum to your nominee if you die during the term and, in a term plan, nothing if you outlive it | The core of life insurance planning for anyone with dependants or debts |
| Whole life | Covers you for life, up to the age the policy states, at a higher premium than term | Compare it with term cover, because the same premium buys less cover |
| Endowment, money-back and child plans | Combine cover with a maturity or periodic payout, often tied to a goal such as a child’s education | Judge them as savings products, not as protection |
| Unit-linked insurance plans (ULIPs) | Combine life cover with a market-linked investment | Judge the investment part on its own costs and returns |
| Annuity and pension plans | Pay a regular income, usually after retirement | A retirement product, not family protection |
Of these types of life insurance, only term insurance is built purely to replace lost income. The others bundle coverage with saving, so insurance planning keeps them out of the protection sum.
Types of health insurance
Health insurance planning begins with how these policies differ.
| Type | What it does | Who needs it |
|---|---|---|
| Individual health policy | Covers one named person up to a sum insured in a policy year | Every adult |
| Family floater | Shares one sum insured across the family members named | Households that want one policy for the family |
| Super top-up | Pays hospital bills above a deductible, on top of a base policy | Anyone whose base policy is smaller than a serious bill |
| Senior citizen policy | A policy for older buyers, with its own terms | Parents and older relatives |
| Critical illness cover | Pays a lump sum if you are diagnosed with a listed illness | An optional add-on |
| Personal accident cover | Pays on accidental death or disability, as the policy specifies | An optional add-on |
| Group health cover | Cover from your employer, which may end when you leave | Extra cover, not the plan |
Among these types of health insurance, a base policy plus a super top-up does most of the work in health insurance planning. Insurance for family often adds a separate policy for parents. The sections below size each one.
Other types of insurance: motor, home and travel
Insurance planning is not only about life and health, because some risks sit with your assets and your travel.
| Type | What it does | Who needs it |
|---|---|---|
| Motor insurance | Covers your vehicle and your liability to others. Third-party cover is required by law for any vehicle on the road, and own-damage cover is optional. Car insurance usually comes as third-party only, standalone own-damage or comprehensive, which combines the two | Anyone who owns a vehicle |
| Home insurance | Covers the building, its contents or both against risks the policy lists, such as fire and theft | Homeowners and tenants who want to cover contents |
| Travel insurance | Covers medical emergencies, trip changes and baggage loss, as the policy specifies | Anyone travelling abroad, since some countries ask for it with a visa application |
These types of insurance protect assets and trips, so they follow the asset or the trip. Buy motor cover when you own a vehicle, and home or travel cover when you own the home or plan the journey. They sit outside the six-step order below, which puts your income and your health first in insurance planning.
Insurance terms you need to know
Eleven terms cover most of what you will read in a policy. These terms appear across all the types of insurance. Keep this table beside you while you compare options, because insurance planning goes wrong quickly when a term is misread.
| Term | What it means |
|---|---|
| Sum assured | The amount a life policy pays on death |
| Sum insured | The most a health policy pays for claims in a policy year, subject to its terms |
| Premium | The price you pay for the cover, usually every year |
| Term insurance | A life policy that pays the sum assured only if you die during the term |
| Family floater | One sum insured shared by every family member named in the policy |
| Deductible | The part of a bill you or your base policy must cover before a top-up pays |
| Super top-up | A policy that pays once your total claims in a year cross the deductible; a plain top-up looks at each claim separately |
| Co-payment | The share of every claim you pay yourself |
| Room rent limit | A cap on room charges; choosing a costlier room can cut related charges in proportion |
| Waiting period | The time before certain illnesses or conditions become claimable |
| Free-look period | The days after you receive a policy in which you can cancel it |
A nominee is the person you name to receive the payout. Naming one is part of insurance planning, but nomination is not the same as legal inheritance, so make a will where it matters.
How much insurance do I need? Start with life cover
How much insurance do I need? There are two answers, one for life cover and one for health cover. Life insurance planning comes first, because it protects the people who depend on your income.
Why an income multiple is only a sense check
You will see “ten times your income”, “ten to 15 times” and “ten to 20 times” quoted. These figures are rules of thumb quoted in guides, not legal requirements, and they ignore your loans, your children’s ages, your savings and your existing cover. Two households on the same income can need very different amounts. Insurance planning that stops at a multiple is guesswork, so use a multiple only to test a number you have built properly.
Method one: add up what your family would need
This needs-based method of insurance planning works in five steps. Add the years of household spending your family would need, add what you owe, add the goals you have promised, add a cash buffer, then subtract savings that can really be used and cover what will stay in force.
Illustration: you are 34 and earn ₹18 lakh a year. Your spouse does not earn, your child is four, and your family spends ₹55,000 a month. Assume the payout earns about as much as inflation, so today’s rupees can be multiplied by the number of years. Assume your family needs 18 years of support.
| Step | Item | How it is worked out | ₹ in lakh |
|---|---|---|---|
| 1 | Household spending | ₹55,000 a month × 12 months × 18 years | 118.8 |
| 2 | Debts | Home loan balance today | 45.0 |
| 3 | Promised goals | Child’s education, in today’s rupees | 35.0 |
| 4 | Cash buffer | One year of spending: ₹55,000 × 12 months | 6.6 |
| Total need | Steps 1 + 2 + 3 + 4 = 118.8 + 45.0 + 35.0 + 6.6 | 205.4 | |
| 5a | Less: savings that can really be used | Savings you can spend without hurting other goals | 30.0 |
| 5b | Less: existing term cover | Term cover that will stay in force | 36.0 |
| Cover to buy | Total need minus steps 5a and 5b = 205.4 minus 30.0 minus 36.0 | 139.4 |
Result: Life insurance planning gives a cover to buy of ₹139.4 lakh, about ₹1.39 crore. Divide it by the ₹18 lakh annual income (139.4 ÷ 18) and it is about 7.7 times income. Now test the assumption. If the payout earned two percentage points above inflation, step 1 would fall to about ₹98.9 lakh, and the cover to buy would fall to about ₹1.2 crore (98.9 + 45.0 + 35.0 + 6.6 minus 66.0 = 119.5). State your assumptions before trusting any figure in your own insurance planning. Count employer group cover in your insurance planning only if you are sure it will stay, because it may end when you change or leave your job.
Method two: human life value
Human life value (HLV), the second method in life insurance planning, estimates the present value of the income your family would lose.
The formula is HLV = yearly contribution to the family × [1 – (1 + r)^-n] ÷ r, where r is a discount rate and n is the working years you have left.
Using the same household, assume ₹12 lakh of your ₹18 lakh reaches the family each year after tax and your own spending, to cover household costs, loan repayments and savings, and you have 26 working years left. At a 4% discount rate the factor is 15.98, so HLV is about ₹191.8 lakh. Subtract the ₹66 lakh of savings and existing cover and about ₹125.8 lakh remains. At 3% the answer is about ₹148.5 lakh, and at 5% it is about ₹106.5 lakh.
Settle on one number
Both insurance planning methods land between about ₹1.07 crore and ₹1.49 crore for this household. A sensible rule in insurance planning is to start with the needs-based figure of ₹1.4 crore, cross-check it with HLV, and then test affordability. A flat ten times income would be ₹1.8 crore, 15 times ₹2.7 crore and 20 times ₹3.6 crore. A multiple can overshoot one family’s need and undershoot another’s, which is why insurance planning builds the number from the family’s own facts. Our guide on how much term insurance you need walks through both methods in more depth.
Want a second opinion on your insurance planning number? The Insurance section of the 1% Club app offers a free, call-based review of the cover you already hold to spot gaps and fix them.
How your situation changes the answer
Insurance planning for a family shifts with who earns, who runs the home and what you owe:
| Your situation | What changes |
|---|---|
| Both spouses earn | Cover each earner for what the household would lose, and count the other’s income and savings as support |
| Your spouse runs the home | The family would have to pay for care and household help, so include that cost in the sum |
| Self-employed or irregular income | Size on a lean year and add business debts that could fall on the family |
| You have just taken a loan | Add the outstanding loan; level cover is simpler for family income, while a cover that falls with the loan suits the loan alone |
| You have employer group cover | Count it only while you stay, and plan personal cover that moves with you |
How long should the term run?
In insurance planning, match the term to the years your family depends on your income and any loan, which usually means until you plan to retire. A longer term costs more each year but keeps protection while loans and children’s costs remain. Do not end cover early if your spouse would still depend on you and has no retirement corpus of their own.
How much health cover you need: sum insured, top-ups and employer cover
Health cover answers a different question in insurance planning. It is not “what would my family lose?” but “what could one serious illness cost, and who pays?”
Four things decide the sum insured
- City and hospital. Costs differ between cities and between hospitals. Ask a hospital you would actually use for a written estimate of a major procedure, such as a joint replacement or a heart operation.
- Age and health. Older ages and existing conditions raise both bills and waiting periods.
- Who is covered. Spouse, children and parents each change the size and shape of the cover.
- Time. Hospital costs rise year after year, so insurance planning has to look ahead.
Health insurance planning must also allow for time. Aon’s 2026 Global Medical Trend Rates report, published on 11 December 2025, puts the expected rise in the cost per employee of employer medical plans in India at 11.5% for 2026, against a global average of 9.8%. That measures the cost of employee medical plans, not hospital bills, so use it as a signal and not as a forecast for your bill. Illustration: at 10% a year, a ₹10 lakh bill today would become about ₹19.5 lakh in seven years, so costs roughly double in that time.
A test you can run today
Ask yourself: if a ₹20 lakh hospital bill arrived next month, how much could I pay from cash without selling money meant for my goals? The shortfall is the cover you need to buy. Swap ₹20 lakh for the written estimate you collected, and allow for rising costs. It is a plain way to size health cover for your own household, and it needs no insurer’s chart, so it is a good first step in health insurance planning.
Base policy plus super top-up
In health insurance planning, a super top-up lets you raise cover above a base policy. Illustration: you hold a ₹10 lakh base policy and a ₹25 lakh super top-up with a ₹10 lakh deductible.
| Hospital bill | Base policy pays | Super top-up pays | You pay |
|---|---|---|---|
| ₹6 lakh | ₹6 lakh | Nil | Nil |
| ₹22 lakh | ₹10 lakh | ₹12 lakh | Nil |
| ₹40 lakh | ₹10 lakh | ₹25 lakh | ₹5 lakh |
This ignores co-payment, room rent limits and items insurers do not pay, all of which can raise your share. Compare the extra premium for a super top-up with the cost of raising the base sum insured before you choose.
Ask AI CFO: “Explain a super top-up policy with a rupee example.”
AI CFO can explain how it works in plain language. It cannot tell you which policy to buy, so confirm the terms in the policy document.
Insurance for family: individual policies or a family floater
Insurance for family often comes down to one choice: a shared floater or separate policies. A family floater shares one sum insured across everyone named, so one large claim for one person can use up cover meant for the rest. Individual policies protect each person’s sum separately. In insurance planning for a family, parents are more likely to claim and to have existing conditions that attract waiting periods, so a separate policy for them keeps their claims away from your family’s sum.
Why employer cover is a bonus, not the plan
Group health cover can have low limits, restricted hospitals, co-payments and exclusions, and it may end when you change or leave your job. Treat it as extra cover on top of a personal base policy in your insurance planning. Insurance planning that rests on employer cover alone leaves a gap at exactly the moment you change jobs.
In the app: Not sure what premiums you can carry before you add a personal policy? Link or add your accounts, and AI CFO shows your monthly surplus and your runway.
Check these limits before you buy
Health insurance planning rests on the policy wording, so read the room rent limit, co-payment, sub-limits on named procedures, waiting periods and exclusions, not the brochure. Our health insurance checklist turns this into steps for buying, porting or renewing.
What to buy first: a sensible order for insurance planning
Order matters in insurance planning because money is limited. For most households, buy the types of insurance in this order:
- A personal base health policy for each adult. Anyone can face a hospital bill.
- Term cover, as soon as anyone depends on your income or you take a loan. At that point, it ranks beside health cover.
- A starter emergency fund, built alongside. It pays for small shocks so you do not lean on claims or loans.
Our guide on How much an Emergency Fund should be shows how to size it. - A super top-up to lift hospital cover if the base policy is smaller than the bill you tested for.
- A separate policy for parents if you support them.
- Personal accident or critical illness cover, only if a gap remains after the steps above.
What to skip: Insurance planning should not use savings-linked or investment-linked policies as your protection. They bundle insurance with a savings element, so judge the savings part on its own costs and returns and buy the protection separately.
Can you afford the premiums? A cash flow test
A policy you stop paying protects nobody, so insurance planning belongs in your monthly budget. Insurance planning is only complete when the premiums fit your budget through a job loss, a bad year or a new baby. Run this insurance planning test:
- Add up the annual premiums for all your coverage and divide by 12.
- Compare that monthly cost with your average monthly surplus.
- Pay premiums from surplus, not from your emergency fund.
- Set aside the annual premium month by month so a renewal never forces you to skip it.
Any percentage of income quoted for premiums is a rule of thumb, so test it against your own surplus. If the premium for your number does not fit, revisit your assumptions, such as the term or the education goal, before you cut cover altogether. Insurance planning that ignores cash flow does not survive a hard year.
Ask AI CFO: “How much is left over each month after my expenses, on average?”
Once your accounts are linked or added, AI CFO can show your cash flow and surplus. The app does not know your premiums unless you tell it, so add them to your own sum.
Ask AI CFO: “How many months could my net worth cover my spending if my income stopped?”
This is the runway view in the app. It is an estimate based on the assets you have linked or added, so treat it as a guide to how long your savings could last, not a promise.
Rules and tax benefits that shape insurance planning in India
Three sets of rules shape insurance planning in India: IRDAI’s consumer rules, GST and income tax.
IRDAI rules for health policies
| Rule | What it says |
|---|---|
| Free-look period | 30 days from receiving the policy document to cancel a policy of one year or more, with a refund less some charges |
| Moratorium | After 60 continuous months of cover, the insurer cannot contest a claim for non-disclosure or misrepresentation unless it proves fraud. Exclusions, limits and co-payments in the policy still apply. |
| Waiting periods | Waits for pre-existing diseases and for specific illnesses cannot exceed 36 months |
| Cashless claims | A decision within one hour of the request and final authorisation within three hours of the hospital’s discharge request |
| Entry age | The 65-year limit on buying a new health policy was removed in 2024. Insurers are expected to cover all ages, but your policy wording sets the terms for your age. |
These come from IRDAI’s Master Circular on Health Insurance Business of 29 May 2024. Your policy may offer shorter waits, so read its schedule before you rely on these rules in your health insurance planning.
What GST means for your premiums
Since 22 September 2025, GST on individual life and individual health policies, including family floater plans, is nil under Notification No. 16/2025 (Central Tax Rate) dated 17 September 2025. For individual buyers, this lowers the cost side of insurance planning. Group policies, including employer-sponsored group health and group life cover, still attract 18% GST. The exemption covers individual life and health policies only, so other types of insurance, such as motor and home cover, are not covered by it.
The Department of Financial Services FAQ sets this out.
Tax benefits on premiums
| Item | Provision | Limit |
|---|---|---|
| Health premium for you, your spouse and children | Section 126, Income-tax Act, 2025 (earlier Section 80D) | ₹25,000 or ₹50,000 if the insured person is a senior citizen |
| Health premium for your parents | Section 126 | ₹25,000, or ₹50,000 if a parent is a senior citizen |
| Preventive health check-up | Within the limits above | ₹5,000 |
| Life insurance premium | Section 123, Income-tax Act, 2025 (earlier Section 80C) | Up to ₹1,50,000 in total with other listed items. Under Schedule XV, the premium counts only up to 10% of the actual sum assured for policies issued from 1 April 2012 (15% where the insured person has a specified disability or disease) |
| Money received under a life policy | Schedule II, Income-tax Act, 2025 | Generally excluded from income if the Schedule II conditions are met. They depend on the issue date, the premium relative to the sum assured and, for policies issued from 1 April 2023, total premiums. Sums received on the insured person’s death are treated separately |
The Income Tax Department’s page on Section 126 sets out the health premium limits. Premiums must be paid by a non-cash mode (the preventive check-up is the exception). Under Section 202, the new tax regime is the default and does not allow these deductions, so you can claim them only if you opt out of it and choose the old regime. In insurance planning, a tax saving is never a reason to buy a policy you do not need. Whether a payout is taxed depends on your policy’s conditions, so check them before you rely on it.
Where to complain
If your insurance planning runs into a problem at claim time, start with the insurer’s grievance officer. If that fails, go to IRDAI’s Bima Bharosa portal, and then to the Insurance Ombudsman. Keep every reference number.
Ten insurance planning mistakes to avoid
These ten mistakes weaken insurance planning most often.
- Relying only on employer cover. It may end with the job. Keep personal cover.
- Buying for the tax deduction. In insurance planning, size cover to the loss first, then see what tax relief follows.
- Using one multiple of income. Insurance planning needs a number built from your own facts. Build it from loans, dependants, goals and savings.
- Ignoring rising hospital costs. Insurance planning should revisit the sum insured every few years.
- Hiding a health condition. Non-disclosure can lead to a rejected claim until the 60-month moratorium applies.
- Choosing the lowest premium. Cheap cover with tight limits can leave you paying more at claim time.
- Mixing insurance and investment. Buy protection and invest separately.
- Letting a policy lapse. Pay from surplus and keep an annual reserve.
- Forgetting to tell your family. Keep policy details and nominee names where your family can find them.
- Never reviewing. Insurance planning is not one-time, so revisit your cover after life events.
Your insurance planning checklist
Use this insurance planning checklist once a year. Tick what is true today:
- I know which types of insurance cover the loss I am protecting against: lost income and a large hospital bill.
- My life cover comes from my family’s needs, not a fixed multiple.
- I hold a personal health policy and treat employer cover as extra.
- My health cover passes the ₹20 lakh bill test, or I have a super top-up.
- My parents have their own cover if I support them.
- My premiums fit my monthly surplus without touching my emergency fund.
- My nominee details are current, and my family knows where the documents are.
- I review my cover after marriage, a child, a loan, a job change, a pay rise or a new illness.
If you ticked all eight, your insurance planning is in good shape. If you ticked fewer, start with the first gap.
Ticked fewer than eight on your insurance planning checklist?
Download the 1% Club app. AI CFO explains any term on this list in plain language, and the Insurance section offers a free policy review with an adviser in a 30-minute call with no commitments, per the app.
How AI CFO and the 1% Club app help with insurance planning
The 1% Club app brings your linked and manually added accounts and assets into one place, so you can see your net worth, your cash flow and how goals fit your plans. For insurance planning, that shows what you can afford and how long your savings could last. AI CFO, the financial assistant inside the app, works on top of that data. Any policy is issued by an insurer, not by 1% Club.
What can AI CFO do for you?
AI CFO can help with health and term-life insurance planning by explaining insurance types and terms such as sum insured, deductible, waiting period, exclusions and moratorium in plain language, using Indian examples. It can also explain how insurance premiums fit into your broader financial plan.
When you connect or add your financial accounts, AI CFO can show your cash flow, monthly surplus and financial runway to help assess whether premiums are affordable. Policy-specific decisions should be verified with a licensed insurance professional.
What else does the 1% Club app offer?
The app’s Insurance section is Pillow Insurance, which the app describes as 1% Club’s in-house insurance advisory service. Per the app, its advisers help you understand your insurance needs, review your existing cover and recommend health or term life insurance based on your requirements. It covers three areas:
- Health insurance: Helps to protect you and your family.
- Term life insurance: Helps to secure your family’s future.
- Policy review: Helps to spot gaps in the cover you already hold and fix them.
Here is what the app gives you at each step of insurance planning:
| What you want to do | What the app offers |
|---|---|
| Understand an insurance term | AI CFO explains it in plain language with Indian examples |
| Check that premiums fit your budget | Cash flow, monthly surplus and runway views, once you link or add your accounts |
| Review a policy you already hold | A free, call-based review in the Insurance section, to spot gaps and fix them |
| Talk through health or term cover with a person | A 30-minute call with an adviser, with no commitments, per the app |
The app also says it offers advice and not a sales pitch, that it makes no spam calls and that more than 5,000 families trust the service. Download the app to see the Insurance section, and use AI CFO alongside it to check your monthly cash flow before you decide on any premium.
Who issues and settles my policy?
The insurer issues the policy and decides claims. AI CFO is a financial assistant that supports your own decisions. It does not replace an insurer, a licensed insurance professional, a chartered accountant or a lawyer.
Your next step
Pick the gap in your insurance planning that worries you most and fix it this week. If you are arranging insurance for family and have no term cover, work out the needs-based number first. If you rely on employer health cover, add a personal base policy to your insurance planning. Then check the premiums against your monthly surplus before you buy anything. Insurance planning is a yearly habit, not a one-off purchase, so put a review date in your calendar.
The 1% Club app helps with the next part. AI CFO shows your monthly surplus so you can test the premiums, and the Insurance section offers a free, call-based review of the policies you already hold, in 30-minute sessions with no commitments, per the app. Read AI CFO’s answers as a prompt to review, not an instruction.
Download the 1% Club app to try AI CFO
This article on insurance planning is general education, not personalised insurance, investment, tax or legal advice. Policy terms, premiums and rules differ by insurer and change over time, so read your own policy document. Examples and calculations are illustrations, not forecasts. AI CFO’s results depend on the accounts and assets you link or add, and they are not instructions to buy or cancel a policy. Speak to a licensed insurance professional before acting.
FAQs
What is insurance planning?
Insurance planning is the process of working out how much life and health protection your household needs, choosing the types of insurance that fit your budget and reviewing them as life changes. It starts with the loss you want to protect against, such as lost income or a large hospital bill, and only then picks policies.
What are the types of insurance, and how many are there?
There is no official count, because sources group policies differently. Insurance falls into two classes: life and general. The types of insurance a household mostly needs are term, health, super top-up, personal accident, critical illness, motor, home and travel cover, plus savings-linked plans. Insurance planning starts with term and health cover.
How much life insurance do I need?
Enough to cover your family’s spending for the years they depend on you, plus loans and promised goals, minus savings and cover that will stay in force. In the illustration above, that came to about ₹1.4 crore for an ₹18 lakh income, or 7.7 times income, but in life insurance planning your figure depends on your own loans, dependants and savings.
How much health insurance is enough?
Enough that a serious hospital bill at the hospital you would use, grown for several years of rising costs, does not force you to sell long-term investments. For many families that means a base policy plus a super top-up. There is no single official number in health insurance planning, so test yours against a written estimate from a hospital.
Which insurance should a family buy first?
Insurance for a family starts with health cover for everyone, because anyone can face a hospital bill. In insurance planning, term cover comes first or alongside it once someone depends on your income or you take a loan. Build a small emergency fund in parallel.
Is employer health insurance enough?
Usually not on its own, and sound insurance planning does not rest on it. Group cover can have low limits, restricted hospitals, co-payments and exclusions, and it may end when you change or leave your job. Keep a personal base policy and treat employer cover as extra.
What is a super top-up policy and when do I need one?
A super top-up pays once your total claims in a policy year cross a deductible you choose. You need one in your health insurance planning when your base policy is smaller than a serious bill you could face. In the illustration, a ₹10 lakh base with a ₹25 lakh super top-up covered a ₹22 lakh bill in full.
Which health insurance is best for a family in India?
No single policy is best for every family, so distrust any ranking that ignores your ages, city and budget. In health insurance planning, the best policy is the one whose sum insured passes your hospital bill test, from an insurer whose claims record, hospital network and waiting periods you have compared. Decide between a family floater and separate policies first.
